Chubb Agrees to Buy Executive Risk

Insurer Chubb Corp. agreed to buy Executive Risk Inc. in a stock swap worth about $850 million to build up its business of insuring executives and directors. Buying Executive Risk should help Chubb develop its more profitable specialty lines while its standard property/casualty insurance to business suffers from declining prices and shrinking profit margins, analysts said. Warren, N.J.-based Chubb said it will exchange 1.235 shares of its common stock for each share of Executive Risk and $200 million in debt. The offer is a 56% premium to Executive Risk’s closing price Friday. Chubb said the acquisition will hurt 1999 earnings per share by less than 2% and is expected to add slightly to earnings in 2000. The companies expect to reduce expenses through the combination, which is scheduled to close in the second quarter. Executive Risk’s shares soared $21.13 to close at $65.13 on the New York Stock Exchange. Chubb’s stock fell $2.63 to close at $55.44, also on the NYSE.